Foreign investors eye Thu Thiem golden land

VietNamNet Bridge - International investment funds are preparing hundreds of millions of US dollars to buy land in Thu Thiem, HCM City, to develop long-term real estate.

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Sketch of a large-scale project in Thu Thiem, HCMC.

In mid-March 2015, the HCM City Technical Infrastructure Investment JSC (CII) had a meeting with investors and shared information about its real estate project in Thu Thiem.

CII General Director Le Quoc Binh revealed, foreign real estate investment funds are hunting for land in Thu Thiem. The reason for this wave is the shift of capital flows from China to Vietnam.

Binh said CII offered for sale a plot of land at very high price to test the reaction of foreign investors and the result is that they are not afraid of high prices providing that the land is clean and located at a good location.

He added that through his research and his investment promotion activities with foreign investors, he found that these investors have one thing in common: they have cash from hundreds to billions of US dollars and they are willing to pay at any time. "Currently the opportunity for Thu Thiem to welcome huge foreign capital is big," he said.

On March 2, Keppel Land (Singapore) signed an investment agreement with conditions to hold 40% stake in Empire City Company Limited (the investor a high-rise project in Thu Thiem). The transaction value is $93.9 million.

Other partners in Empire City are Vietnamese firms: Tien Phuoc Estate JSC, Tran Thai Real Estate and Hongkong-based Gaw Capital Partners estate investment fund.

Keppel Land and its partners will jointly develop a project with a prime location along the Saigon River with an area of 14.6 hectares in the Thu Thiem new urban area in District 2, HCM City. The project is planned to include luxury apartments, offices, retail space and a 86-story tower.

Earlier, another super project called Thu Thiem Eco Smart City, worth up to $2 billion invested by Lotte Group (South Korea) was announced.

The project is expected to turn this area into a center of superior finance, trade and service, the most modern in the region, including a department store and a mall up to international standards. Reportedly, Lotte deposited VND2,000 billion to implement the project in 2016.

Senior Consultant of the Global Integration and Business Consulting Company (GIBC) Huynh Phuoc Nghia confirmed: “Since October 2015, a lot of foreign investors, especially Asian investors, have been hunting golden land in Thu Thiem."

These investors are only interested in clear land of at least one hectare or more. The most important condition is the land has good infrastructure connections to the existing center. Most foreign investors are interested in long-term projects, which needa lot of capital.

Nghia said there werevmany reasons why foreign investment funds are increasingly interested in Thu Thiem. First, capital flows are shifting from the more volatile market are China to Vietnam and the emerging area of Thu Thiem is potential, with vast area of clear land.

Second, the infrastructure of the East HCM City has been developed strongly in recent years, particularly in districts of 2, 9 and especially Thu Thiem. On average, VND1 investing in infrastructure can cause real estate price increase by 10-15%.

Third, policies to attract foreign investors in the field of real estate are being improved. Fourth, Vietnam is deeply integrating into the world economy by participating in many trade agreements.

However, Nghia noted that Thu Thiem in particular and the Eastern part of HCM City in general are considered a new, potential and attractive area to foreign investors, but this is not a perfect market.

Besides huge advantages, Thu Thiem has some common weaknesses of the Eastern urban area of Saigon: a place that is good to live in but is without services and entertainment activities of a center area.

Nghia saidthe price for Thu Thiem land is expensive (more than $3,000/m2) but not a problem for international investors. But the stability of the Investment Law, openness, and administrative reform are still uncertainties for foreign investors.


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Nam Nguyen

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